Fischetti v Guillen2013 NY Slip Op 30363(U)

February 6, 2013Supreme Court, Suffolk CountyDocket Number: 26061-2012

Judge: Emily PinesRepublished from New York State Unified Court

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SHORT FORM ORDER INDEX NO. 26061-2012

SUPREME COURT - STATE OF NEW YORKCOMMERCIAL DIVISION, PART 46, SUFFOLK COUNTY

Present:

HON. EMILY PINESJ. S. C.

Motion Date: 10-09-12; 10-23-12 &09-23-12

Submit Date: 11-13-12Motion No.: 001 MD

002 MG003 MD[ ] Final[ X ] Non Final

Plaintiff,

Attorney for PlaintiffPeter S. Samaan, Esq.Westerman SheehyKeenan Samaan & Aydelott LLP333 Earle Ovington BoulevardSuite 702Uniondale, New York 11553

______________________________________x

JOHN FISCHETTI,

- against- Attorney for the Defendant GuillenKatheryn Dati, Esq.Twomey, Latham, Shea, Kelly,Dubin & Quartararo, LLP33 West Second StreetRiverhead, New York 11901

LUIS GUILLEN, LISA KEENEN and DUTCHPETALS, INC,

Defendants.______________________________________X

Attorney for the Defendant KeenanAndrew Towner, Esq.Caleca & Towner, Esq.257 Pantigo RoadEast Hampton, New York 11937

Dutch Petals, Inc.1 Leecon CourtSouthampton, New York 11968

ORDERED that the plaintiffs motion (001) for an order appointing a receiver, a temporaryinjunction, to restore the plaintiff to his former position, and other relief, is denied; and it is further

ORDERED that the motion (002) by defendant Luis Guillen seeking to dismiss the complaintis granted to the extent that the second, third, and fourth causes of action are dismissed; and it isfurther

ORDERED that the motion (003) seeking an order vacating the temporary restraining orderis denied as academic; and it is further

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ORDERED that defendant Guillen is directed to serve and file an answer pursuant to CPLR3211 (1); and it is further

ORDERED that the parties are directed to appear at a preliminary conference on March 12,2013, at 9:30 a.m. in Part 46, One Court Street, Riverhead, New York; and it is further

ORDERED that counsel for defendant Guillen shall serve a copy of this Order with Noticeof Entry upon counsel for plaintiff and other defendants, pursuant to CPLR 2103(b)( 1), (2) or (3),within thirty (30) days of the date the order is entered and thereafter file the affidavit(s) of servicewith the Clerk of the Court.

In this action, the plaintiff seeks damages for breach of a shareholder agreement. Thecomplaint asserts four causes of action: breach of contract, breach of an implied contract, breach offiduciary duty, and theft of corporate opportunity. The record reveals that the Dutch Petals, Inc.(Hereinafter, "the defendant corporation") was incorporated on August 21, 2003. The plaintiff,defendant Luis Guillen, and defendant Lisa Keenan were elected to the board of directors.Defendant Guillen was elected president of the Board of Directors, and Lisa Keenan was electedsecretary of the Board of Directors. The shareholders agreement reveals that the plaintiff anddefendant Guillen loaned the defendant corporation $60,000, and received 45 and 50 shares ofcorporate stock respectively. Defendant Lisa Keenan provided no loans to the defendant corporationand received 5 shares of corporate stock. The plaintiff's attorney affirms that the three shareholdershad a disagreement which led to an accounting and a financial appraisal of the corporate assets. Therecord reveals that the parties reached a standstill agreement at a shareholder's meeting on June 7,2012, which provided for a forensic accounting and that the parties would stay any further actionpending negotiations. However, on August 21,2012, defendant Guillen called a special shareholdersmeeting to be held on August 22, 2012, at which time, the board of directors voted unanimously toremove the plaintiff as a director, officer and employee of the corporation. This action wassubsequently commenced.

The plaintiff now moves for an order appointing a temporary receiver, restraining defendantsfrom operating the corporation outside the normal course of business, reinstating the plaintiff as anofficer, director and employee, and other relief Defendant moves for an order dismissing thecomplaint pursuant to CPLR 3211 (a) (7), and cross-moves separately for an order vacating the priororder which granted the temporary relief to the plaintiff.

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The Court now turns to the motion seeking a preliminary injunction and the cross motionwhich seeks to vacate the temporary relief granted by this Court by order dated August 23, 2012.The party seeking a preliminary injunction must establish (1) a likelihood of success on the merits,(2) the movant will suffer irreparable harm in the absence of an injunction and (3) a balancing of theequities favors the granting of an injunction. Aetna Ins. Co. v Capasso, 75 NY2d 860, 552N.Y.S.2d 918 (1990); Doe v Axelrod, 73 NY2d 748,536 N.Y.S.2d 44 (1988); Olabi v Mayfield,8 AD3d 459, 778 NYS2d 311 (2d Dept 2004). The party seeking the preliminary injunction mustpresent evidence establishing the likelihood of success on the merits. Ying Fung Moy v HohiUmeki, 10 AD3d 604,781 NYS2d 684 (2d Dept 2004); Terrell v Terrell, 279 AD2 301,719NYS2d 41 (1st Dept 2001). "Conclusory statements lacking factual evidentiary detail warrantdenial of a motion seeking a preliminary injunction" (Jd.). As for the element of irreparable harm,the key determinant is whether or not that harm may be compensated by money damages if themotion is not granted. WHG CS, LLC v LSREF Summer REO Trust 2009, 79 AD3d 629, 915NYS2d 36 (1st Dept 2010; EdCia Corp. v McCormack, 44 AD3d 991,845 NYS2d 104 (2d Dept2007). Here, the plaintiff has submitted the affirmation of counsel who fails to submit evidencewhich would meet the necessary elements for a preliminary injunction. In addition, the Court is notconvinced that the plaintiff may not be made whole by the payment of money damages, as allegedin the complaint. Accordingly, the motion seeking a preliminary injunction is denied, and thetemporary relief granted by order dated August 23, 2012 has hereby expired. As a result, defendantGuillen's cross motion to vacate the temporary restraining order is denied as academic.

Turning to the motion to dismiss the complaint, "in considering a motion to dismiss apleading for failure to state a cause of action, the court must accept the allegations of the complaintas true, accord the plaintiff the benefit of every possible favorable inference, and determine onlywhether the facts as alleged fit within any cognizable legal theory" CPLR 3211 [a][7]; Munger vBoard of Educ. of the Garrison Union Free School Dist., 85 AD3d 747,748,924 NYS2d 578,580 (2d Dept 2011); accord, Leon v Martinez, 84 NY2d 83, 614 NYS2d 972 (1994). If the courtcan determine that the plaintiff is entitled to relief on any view of the facts stated, its inquiry iscomplete and the complaint must be declared legally sufficient. Symbol Tech., Inc. v Deloitte &

Touche, LLP, 69 AD3d 191,193-195,888 NYS2d 538 (2d Dept 2009). Whether a plaintiff canultimately establish its allegations is not part of the determination. Sokol v Leader, 74 AD3d 1180,904 NYS2d 153 (2d Dept 2010).

Turning to the second cause of action alleging that the defendants breached an impliedcontract to operate the company in good faith and in a reasonably prudent manner, accepting thefactual allegations contained in the complaint and the submissions in opposition to the motions, as

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true, and giving them every favorable inference, the Court finds that the plaintiff has failed to statea cause of action. The Court construes this allegation to mean that the defendants breached theirduty of good faith and fair dealing. Implicit in all contracts is a covenant of good faith and fairdealing in the course of contract performance. Dalton v Edue. Testing Serv., 87 NY2d 384, 389,639 NYS2d 977 (1995). Inasmuch as the plaintiff has alleged a breach of contract in the first causeof action, the instant cause of action is duplicative of that claim. Therefore, the second cause ofaction is dismissed.

With regard to the third cause of action alleging that the defendants breached their fiduciaryduty, accepting the factual allegations contained in the complaint and the submissions in oppositionto the motions, as true, and giving them every favorable inference, the Court finds that the plaintiffhas failed to state a cause of action. A cause of action alleging breach of fiduciary duty which ismerely duplicative of a breach of contract claim, cannot stand. See Celie v Barclays Bank P.L.C.,48 AD3d 301, 302, 851 NYS2d 500 (2008); Brooks v Key Trust Co. Natl. Assn., 26 AD3d 628,630, 809 NYS2d 270 (2006); William Kaufman Org., Ltd. v Graham & James, 269 AD2d 171,173, 703 NYS2d 439 (2000). Here, the cause of action fails to allege conduct by defendants inbreach of a duty other than, and independent of, that contractually established between the partiesand is thus duplicative. Kaminsky v FSP Inc., 5 AD3d 251, 252, 773 N.Y.S.2d 292 [1st Dept2004]

Turning to the fourth cause of action, accepting the factual alelgations contained in thecomplaint and the submissions in opposition to the motion, as true, and giving them every favorableinference, the Court finds that the plaintiff has failed to state a cause of action. An action for fraudmust be pled "with particularity, including specific dates and items, if necessary and insofar aspracticable" (CPLR 3016 [b]), which the Plaintiff failed to do. Conclusory allegations of fraud willnot be sufficient. Robertson" Wells, 95 A.D.3d 862, 944 NYS2d 19 (2d Dept 2012); Sargiss vMagarelli, 50 AD3d 1117,858 NYS2d 209 (2d Dept 2008); Dumas v Fiorito, 13 AD3d 332, 786NYS2d 106 (2d Dept 2004). In order to make a prima facie showing of fraud, a Plaintiff mustestablish "a representation of fact, which is either untrue and known to be untrue or recklessly made,and which is offered to deceive the other party and to induce them to act upon it, causing injury."Jo Ann Homes at Bellmore, Inc. v Dworetz, 25 NY2d 112, 119,302 NYS2d 799 (1969). In anyevent, it is well settled that a cause of action for fraud does not arise when the only fraud chargerelates to a breach of contract. See Breeo Envtl. Contrs., Inc. v Town of Smithtown, 307 AD2d330,332, 762 NYS2d 822 (2d Dept 2003); Melissakis v Proto Constr. & Dev. Corp., 294 AD2d342,343, 741 NYS2d 731 (2d Dept 2002). In the case at bar, the plaintiff has failed to allege theactual facts surrounding the fraud. In any event, a cause of action alleging fraud does not lie wherethe only fraud claimed relates to a breach of contract. See Tiffany at Westbury Condominium by

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Its Bd. of Mgrs. v Marelli Dev. Corp., 40 AD3d 1073, 1076, 840 NYS2d 74 (2d Dept 2007);Rocchio v Biondi, 40 AD3d 615,835 NYS2d 401 (2d Dept 2007); Mendelovitz v Cohen, 37 AD3d670, 830 YS2d 577 (2d Dept 2007). Therefore, the fourth cause of action is dismissed.

Accordingly, the plaintiffs motion (001) seeking, inter alia, a temporary receiver, atemporary injunction and to restore the plaintiff to his former position, and the defendant's crossmotion (003) seeking, inter alia, to vacate the order which granted temporary injunctive relief to theplaintiff, are denied without prejudice to renew upon the completion of all discovery. Thedefendant's motion (002) to dismiss the second, third and fourth causes of action is granted.Defendant Guillen is directed to serve and file an answer pursuant to CPLR 3211 (f).

Dated: February 6, 2013Riverhead, New York ILYPINES

J. S. C.

[ ] Final[ x ] Non Final

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